LKAS 1 – Presentation of Financial Statements

OBJECTIVE The standard prescribe the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content

SCOPE An entity shall apply this standard in preparing and presenting general purpose financial statements in accordance with Sri Lanka Accounting Standards.(SLFRSs) This standard doesn’t apply to the structure and content of condensed interim financial statements prepared in accordance with LKAS 34 Interim Financial Reporting. Terminology– Suitable for profit oriented entities. (including public sector entities) Not‐for‐profit entities may amend the descriptions used for particular line items Entities that do not have equity as defined in LKAS32 Financial Instruments: Presentation (e.g. some mutual funds) and entities whose share capital is not equity(eg some co‐operative entities) may need to adapt the financial statement presentation of members’ or unit holders ’interests.

Purpose of Financial statements The purpose of financial statements is to furnish the information about the financial position, financial performance and cash flows on an entity that is useful to a wide range of users in making economic decisions. show result of management’s stewardship of the resources entrusted to it. provide information about an entity’s – Assets – Liabilities – Equity – Income and Expenditure, Including Gains and Losses – Other Changes in Equity – Cash flows

Asset A resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity. Example : cash, investments accounts receivable, inventory, supplies, land, buildings, equipment, and vehicles.

Liability A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resource embodying economic benefits. Example :- accounts payable, accrued expenses, wages payable, and taxes payable

Equity The residual interest in the assets of the entity after deducting all its liabilities.

Income Increases in economic benefits during the accounting period in the form of inflows enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.

Expenses Decreases in economic benefits during the accounting period in the form of outflows Depletions of assets or incurrence of liabilities that result in Decreases in equity, other than those relating to distributions to equity participants.

The Components of a Complete set of Financial Statements A statement of financial position as at the end of the period. A statement of profit/ loss and other comprehensive income statement for the period to be presented either as: – one single statement of comprehensive income – a separate income statement and statement of comprehensive income. In this case, the former must be presented immediately before the latter; A statement of changes in equity for the period. A statement of cash flows for the period. Notes, comprising a summary of significant accounting policies. – A statement of financial position as at the beginning of the earliest comparative period when: An accounting policy has been applied retrospectively; or A retrospective restatement has been made; or items have been reclassified